According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) advisor Minish “Joe” Hede (Hede), in April 2017, was terminated by his then employer Paulson Investment Company, LLC (Paulson Investment) subsequent to the initiation of customer arbitration claim alleging fraud, negligence and unjust enrichment and for failure to comply with internal investigation.
Also in April 2017 Hede was subject to an arbitration complaint alleging damages of $1,000,000 stemming from the sale of a promissory note and allegations of fraud, negligent misrepresentations, negligence, and unjust enrichment. The claim is currently pending.
At this time the extent and scope of Hede’s sales of this product is unknown. The only outside business activity disclosure Hede made publicly is that he is a silent partner in a restaurant called Prime 16. FINRA requires brokers to disclose their outside businesses because the risk to investors is that the broker will use such businesses to engage in unauthorized securities activities. The providing of loans or selling of notes and other investments outside of a brokerage firm constitutes impermissible private securities transactions – a practice known in the industry as “selling away”.
In the industry the term selling away refers to when a financial advisor solicits investments in companies, promissory notes, or other securities that are not pre-approved by the broker’s affiliated firm. However, even though when these incidents occur the brokerage firm claims ignorance of their advisor’s activities the firm is obligated under the FINRA rules to properly monitor and supervise its employees in order to detect and prevent brokers from offering investments in this fashion. In order to properly supervise their brokers each firm is required to have procedures in order to monitor the activities of each advisor’s activities and interaction with the public. Selling away misconduct often occurs where brokerage firms either fail to put in place a reasonable supervisory system or fail to actually implement that system. Supervisory failures allow brokers to engage in unsupervised misconduct that can include all manner improper conduct including selling away.
In cases of selling away the investor is unaware that the advisor’s investments are improper. In many of these cases the investor will not learn that the broker’s activities were wrongful until after the investment scheme is publicized, the broker is fired or charged by law enforcement, or stops returning client calls altogether.
Hede entered the securities industry in 1994. From January 2013 through February 2013 Hede was associated with Roth Capital Partners, LLC. Thereafter, from February 2013 until May 2017, Hede was associated with Paulson Investment out of the firm’s New York, New York office location.
Investors who have suffered losses may be able recover their losses through securities arbitration. The attorneys at Gana LLP are experienced in representing investors in cases of selling away and brokerage firms failure to supervise their representatives. Our consultations are free of charge and the firm is only compensated if you recover.